The draft Corporate Average Fuel Efficiency (CAFE) 3 norms, which seek to tighten fuel-efficiency and carbon-dioxide-emission targets for all passenger vehicle OEMs, have equated battery-electric vehicles (BEVs) with a new category of vehicles, called Range Extender Electric Vehicles (REEVs).
As the passenger vehicle industry debates the draft CAFE 3 norms amid deep divisions among various OEMs over vehicle weight, powertrains, etc., the Associated Chambers of Commerce and Industry (Assocham) has now urged the government to bring REEVs under the 5 per cent GST slab and at par with BEVs. The chamber has alluded to the mention of REEV in the CAFE 3 norms to support its argument.
In a letter to the Ministry of Heavy Industries, Assocham has said, “To help the government of India achieve its target of 30 per cent electric vehicle penetration by FY 2030, we request your support in recognising Range Extender Electric Vehicles (REEVs) under the 5 per cent GST bracket currently applicable to Battery Electric Vehicles (BEVs).”
The industry body added that lowering the GST rate on REEVs will help expand the BEV market base and catalyse investments in innovation and the development of the supply base for new energy vehicles in India.
What are REEVs?
An REEV is fundamentally an electric vehicle that carries a backup generator in the form of a small gasoline engine to recharge the battery. In a traditional hybrid vehicle, both the gasoline engine and the electric motor power the wheels. In an REEV, the gasoline engine never drives the wheels.
Ranjan Nayak, CEO, JSW Motors, said that such “transitional models” allow consumers to adopt electrification without fear of range limitation, encourage local suppliers to build capability and give policymakers time to expand grid infrastructure.
He cited China’s example, where REEVs along with hybrids became the foundation of an EV revolution, driving annual NEV sales “from 0.3 million in 2015 to over 16 million (total 30 million) in 2025″.
“REEVs represent not just vehicle technology but a strategic bridge, enabling India to electrify mobility faster, wider and smarter. Although REEVs are electric-driven vehicles, ambiguity in GST classification risks placing them under higher tax slabs, undermining affordability. The government must classify REEVs under the 5 per cent GST rate. As China’s journey shows, true transformation lies not in a leap, but in a well-paced transition that builds confidence, capability, and continuity,” Nayak explained.
Assocham, in its representation, said that under the new GST structure, battery electric vehicles (BEVs) are taxed at 5 per cent, ICE and PHEV vehicles with a length under four meters are taxed at 18 per cent, and larger ones at 40 per cent, but REEVs have not been put under any GST category at all.
The chamber has also said that the architecture of REEVs requires them to be larger – they need to accommodate a motor, battery, and an engine – but their contribution in lowering emissions should entitle them to the lowest slab of 5 per cent GST.
